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Economic output contracted as expected in the second quarter of the year — 0.2% quarter on quarter — after downwardly revised growth of 0.4% in the first three months of the year, weighed down by the trade, catering and accommodation, manufacturing and mining industries.Economists had predicted GDP would either be flat or shrink slightly in the second quarter, after high-frequency data pointed to weakness, particularly in the key manufacturing and mining sectors, which account for about 12% and 7%-8%, respectively, in national output, with extensive linkages to other parts of the economy.Data from Stats SA on Tuesday showed that the trade, catering and accommodation industry decreased 1.9%, contributing a negative 0.2 percentage point to the headline number. Factory production shrank 1.8%, contributing another negative 0.2 percentage point, with seven of the 10 divisions reporting declines.Output in the mining and quarrying industry also fell 3%, accounting for a negative 0.1 percentage point to second-quarter GDP. The largest negative contributors were platinum group metals, manganese ore, gold and iron ore.“This is the first contraction we have seen after six quarters of resilient and positive growth,” statistician-general Risenga Maluleke told a media briefing.The second-quarter release, which comes on the heels of recent reports showing that both consumer and producer inflation slowed in July, gives the South African Reserve Bank scope to keep interest rates unchanged at its fifth policy meeting of the year, later in September.The Bank hiked its benchmark policy rate 25 basis points to 7% in May as second-round inflationary effects started to emerge from the spike in global oil prices stemming from the US-Iran war. It, however, kept rates unchanged in July.Business Day
